Does Montana follow the federal no-tax-on-tips and overtime deductions?
CONFORMS
Montana follows the federal deductions, so qualified tips and overtime are deductible for state income tax as well as federal, subject to the details and years in the state's own guidance below. You still claim the federal deduction on Schedule 1-A first.
Verified against the official state source below — last verified October 26, 2026
| Deduction | Montana position |
|---|---|
| Federal tips deduction (IRC §224) | Conforms |
| Federal overtime deduction (IRC §225) | Conforms |
What the state itself says
"Taxpayers will report the total of their standard or itemized deductions along with the additional deductions found on Form 1040, Schedule 1-A."
- Official source
- Montana Department of Revenue, "2025 Montana Form 2 Individual Income Tax Instructions"
- Tax years covered
- 2025 (structural mechanism; federal window 2025–2028).
Form 2 starts with federal AGI (line 1), then subtracts the total of Form 1040 lines 12e and 13b (line 2) — and line 13b carries the Schedule 1-A total. The line instructions state expressly that the Schedule 1-A deductions "for qualified tips, qualified overtime compensation… are included in the calculation of Montana taxable income," and Schedule I contains no addback. Treatment is in the official form instructions; no separate statute or guidance page exists.
Your federal deduction is separate
Whatever your state does, the federal deductions run on their own rules: check your W-2 codes with the W-2 Code Checker, estimate with the Tips Calculator and Overtime Calculator, and see the glossary for any term. All state positions: the state-by-state index.
State position verified October 26, 2026 from the official source above. State guidance changes; confirm on the source before filing. This page is general information, not tax advice.